Another view of New America: inequality, low social mobility, rising heroin use. Fun, but not for all.

Summary: A different perspective on the New America arising now. Heroin, unemployment, and inequality — bricks in the structure.

I have attempted — with, I suspect, little success — to convey to you that we have left America That Once Was and begun a journey to a New America. We were relaxing by the river, and fell into a deep hole. We were living in our farm in Kansas, and then a tornado came.

The oddest aspect I find about living in Oz is not the strange things. It’s that others do not see them as well. “Look, flying monkeys” I say! “No”, I’m told in the comments. “Those are just squirrels.” This is the primary purpose of the Predictions Page, to show you (and myself) which of our contrasting views of the world is correct.

The Predictions Page serves a second role. This is a journey to New America. Which means we experience new things. I point them out; years later you read about them on the front page of The Economist (motto: accurate, interesting, new — pick two). By then new astonishment have appeared to write about on the FM website. The predictions page serves as reminder that you read about today’s headlines long ago.

Today’s example, making this real for you: five years ago a series of posts (now 26) began warning about America’s increasing income inequality and falling social mobility — how the crash would accelerate it, and how this would destroy the America we knew. Now it’s headline news. On both the Right and Left they spin fantasies of Revolution. On the Right they write about the threat of unwashed moochers and the coming mindless vandalism. On the Left they write about the coming Jubilee when the oppressed arise and righteously smite the evil rich.

Meanwhile, back in the real world, from the 2011 National Survey on Drug Use and Health. Note the inflection point in 2007. Widespread unemployment, foreclosures, bankruptcy — ruined lives (but very very rich bankers). The increase from the 2003 and 2005 lows is statistically significant at the .05 level.

Figure 2.4 Past Month and Past Year Heroin Use among Persons Aged 12 or Older: 2002-2011

2011 National Survey on Drug Use and Health

Bow before our God!

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As you look at this chart, let’s review the basics. The New America now arising differs from the One-that-Once-Was. The New America is built on the bodies of Americans. It’s construction is powered by our apathy and indifference. The 2012 election showed, once again, that the New American elites regard us with contempt. Our behavior so far shows that they are correct.

But change is the essence of life. We can do better.

About Revolutions

Exploitation of the masses by ruling elites is a commonplace of history. Master-peasant is a proven stable form of society. Aristocrats (hereditary wealthy class) oppressing the masses are another commonplace. Revolutions are rare thing. Captain Kirk (the original Star Trek) is wrong; people live quietly as slaves and serfs.

We see the same in our society. The Gilded Age, broadly speaking, lasted for several generations. It was broken by the Great Depression, when the combination of economic stress and fear of communism forced our ruling elites to reform. The WW2 mobilization and its aftermath forced still more reforms (again, a commonplace of history — the ruling elites make concessions to the proles to gain their support for wars). Neither set of reforms were in a real sense earned by us; they were gifts of history (i.e., the blood and tears of unions made reform possible, but as of 1929 had only limited success).

Oppression by itself does not decrease stability, unless done in an extreme and stupid manner. There must be a spark. I see no such spark on our horizon. We must kindle one for ourselves. We have the ability to reform America, and lack only the will to do so.

32 thoughts on “Another view of New America: inequality, low social mobility, rising heroin use. Fun, but not for all.”

Have you ever read or are you familiar with The Fourth Turning about generational theory? They predicted something similar in 1997. I’ve just picked it up; your posts make a lost of sense within their context.

There is a very active thread on the intertubes on “The Fourth Turning”. See http://www.theburningplatform.com for intro. This self-described work of prophecy by a couple of beltway economists written in the mid-Nineties has been uncannily accurate in predicting the shape of history since then. They predict a major catastrophe/crisis/revolution/structural change in the 2020s.

Some of us in economics saw the beginnings of the shift toward neo-feudalism when Reagan won the 1980 presidential election and conned the country with supply-side economics, voodoo economics that said that cutting taxes for rich people would increase the government’s tax revenues and make poor and middle-class people better off. Exactly the opposite happened. “Reagan is going to wreck the economy,” I distinctly remember a colleague saying in 1980.

What is currently coming to awareness is that the instrument of control of the elites is the fiat money central banking system now universally adopted by developed nations. As is widely acknowledged in financial circles, the central banks of the world are engaged in uncontrolled money printing and a “race to debase” that the econophysicists expect to culminate in about 2020. See Didier Sornette’s talk on TED and the references in http://animalspiritspage.blogspot.com/2013/07/when-will-financial-singularity-occur.html especially “The Illusion of the Perpetual Money Machine.”

The banks control the payment system, and the government of course. For a while Visa up made it impossible to contribute to WikiLeaks, although that problem seems to have been resolved at least pro tem. Visa recently cut off a major online gun store. And so on.

I would bet that the 2020s usher in a new neo-feudalism that could last for quite a long time. The catch to this forecast is that if the global monetary system breaks down, anything could happen.

We can only guess about the duration and difficulty of this transition to a new world order, and the nature of the new global system. These periods are like singularities in physics. They are like birth itself. The passage is painful, and one has no idea what awaits on the other side.

The last transitional period was 1914 to 1945, with two world wars and a Great Depression. Let’s hope this transition is nicer.

I should add that it was that fiscal profligate, Richard Nixon, who set the stage for Reaganomics in the illusion that debt-financed consumption equals real growth — i.e., by removing the Bretton Woods I peg to gold in 1971.

The modern Republican Party is the most fiscally irresponsible party in American history.

“The modern Republican Party is the most fiscally irresponsible party in American history.”

Yes, by a large margin. The massive deficits rung up by Reagan-Bush Sr and Bush Jr were unnecessary — harmful with no offsetting benefits.

“I should add that it was that fiscal profligate, Richard Nixon, who set the stage for Reaganomics in the illusion that debt-financed consumption equals real growth — i.e., by removing the Bretton Woods I peg to gold in 1971.”

No. The fundamental flaws in Bretton Woods were obvious to economists by the mid-1960s. Floating rates were the only workable and politically-feasible alternative. And this system has worked quite well. After the recovery from the 1970s oil shocks, the next quarter-century saw what was probably the world’s fastest economic growth since the invention of agriculture.

The oil dollar deal fuels the system. What happens when there is a disruption in that? Will that hapen in 2020s? Could be. Saudi Arabia, the linch pin, has a growing youth unemployment time bomb. It could face some major upheaval by that time.

The denomination of trade has a relatively small effect (i.e., tiny) on the relative value of currencies. What matters is the currency in which assets are issued, people’s and institutions’ interest in holding these assets, relative incomes among nations, trade flows, and several other factors.

If GDP is going to continue to grow, while at the same time the middle class is being decimated, what has to happen is the rich need to starting spending more money. Evidence of the gilded age here in the SF Bay area is that America’s Cup race. I get that riding on sailing yachts is a hobby for rich guys, but Ellison spent $200M for the American team? I think this might be just the start of the trend. We’ll see other billionaires lavishly sponsoring vanity projects — including that SpaceshipOne. We have paintings in the $100M range — when will the first painting break the $1B barrier? I figure the $100M estate will be obsolete once they all start moving into the Billion dollar homes.

A great article about the America’s Cup: “The Miracle on San Francisco Bay” By Josh Levin, Slate, 25 September 2013 — “Oracle Team USA’s billionaire-funded, cheat-tastic America’s Cup comeback reveals the awesome power of the inspirational sports narrative.”

For such a popular theory, predictions made since the 1920s using K theory have usually proven wrong. Which is why article about it do not include citations to thousands of specific articles from the past making successful predictions using Kondratieff’s theories.

it’s survey data so you are relying on the subject to accurately remember/report their past year’s drug use, so take it with a grain of salt. also not that these are not necessarily long time users, but also include casual ‘first timers’ who may never return to the drug or become addicted.

further, looking at one drug is somewhat an inaccurate diagnosis–are there other factors that explain the spike? was their a glut of heroin on the streets in 05-06 that made it easier to access or a big bust in 06-07 that made it harder to obtain? did the decline in heroin over this period correlate to an increased abuse of other opiates (esp. prescriptions)? you’re only looking at a small sliver of data. you shouldn’t reject it out of hand because it is a priori an incomplete picture.

with that in mind, i am curious if there is anything to support there is a causal nature between economic disenfranchisement and increased drug (esp. heroin) use. while it is a common narrative i am curious if any researchers have indeed tackled the connection and been able to show the relationship is driven by socio-economic stress and not other explanatory causes (ease of access, cultural norms, or policies that inadvertently make strong drugs available, etc.), especially since i don’t think household income is reported as part of the survey (could be wrong tho).

Citing the Financial Sense website and The Daily Mail as sources? You must be joking.

Basic economics. We could conduct trade in any currency with little effect. What matters is the currency we hold at the beginning and end of the transaction. That’s not just Econ 101, that’s common sense.

http://consortiumnews.com/2013/09/23/should-cruise-missiles-target-saudis/
Should Cruise Missiles Target Saudis?
September 23, 2013
Exclusive: Saudi Arabia – confident in its leverage over energy and finance and emboldened by a de facto regional alliance with Israel – is throwing its weight around with threats against Russia. But this muscle-flexing is drawing a tough reaction from President Putin, reports Robert Parry.

FM there is a reason why US Govt made special deal with Saudi Arabia. How come you are not aware of it? It made dollar reserve currency. Nixon made deal with Sausdi Arabia after he decided to take US off gold standard. It makes US the biggest currency manipulator. Forces countries to buy US dollars. President Richard Nixon made deal with King Faisal of Saudi Arabia to accept U.S. dollars – and only U.S. dollars – as payment for oil. This was also time when OPEC was established.

I have a low interest in this sort of nonsense. Please either take a break or cite actual evidence, not material from fringe fantasy websites.

The US-Saudi alliance is a matter of public record.

Nations making agreements about use of currencies has been standard practice for centuries.

You have shown no evidence of the US “forcing” anyone to use the US dollar.

The US does use the global banking system as a weapon, however, limiting access to it as a tool of foreign policy. Again, this is public record — and nothing unusual in the historical range of behavior by hegemons.